The entry of new firms into a monopolistically competitive industry is generally more difficult than is the entry of new firms into an oligopolistic industry.

Question

Quizplus · Accepted Answer

The statement is false. The entry of new firms into an oligopolistic industry is generally more difficult than in monopolistically competitive industries. In an oligopoly, a few dominant firms have significant control over the market and can prevent new firms from entering through various barriers to entry, like patents and high start-up costs. In contrast, a monopolistically competitive industry has many smaller firms, and entry barriers are generally lower, allowing for more new firms to enter the market.

The Entry of New Firms into a Monopolistically Competitive Industry